Bernard M. Baruch. Does the falling stock market slowdown

Bernard M. Baruch. Does the falling stock market slowdown?

As a child, Bernard Baruch, picking cotton to earn money on powder and shot, and thus be able to hunt rabbits. In his autobiography, he recalls how growing up in rural South Carolina, where in the years following the Civil War, white and black are constantly in conflict. When in a duel killed a close friend of ego, the father of Baruch in 1880 moved his family to New York. In 1884, young Baruch entered the "City College". After graduatingfrom Baruch was able to go to Mexico to work at the venerable Guggenheim family, but his caring mother forbade it, and found him a job as an assistant in the bank. It is not long continue. Bored and looking for adventure, Baruch went to Colorado in search of gold, where he worked at the mine during the day and at night gambling.

In 1891, Baruch returned to New York and worked for a member of the New York Stock Exchange, first as a clerk and later an analyst, he soon began working on their own, appealing to different people in search of money for investment. Baruch, easy to make friends (ie, Guggenheim and Rockefeller), made a million on the market. He attributed their success to a rigorous self-assessment. "And when I come to know himself - he said - I am a better understanding of other people." For him, the Wall Street - "one long lesson in human nature." In general he was very careful with the rumors. "The internal information is something that seems to paralyze rational powers of man ... He will ignore the most obvious facts" - he said.

Baruch was a force on Wall Street, the press began to track his whereabouts. One newspaper reported: "One of the reasons that led the room traders to take a bearish stance has been a rumor that the BM Baruch was going to leave a little vacation ..." Former gambler eventually became an adviser to U.S. presidents. He served as chairman of the Military Industrial Council during the First World War and his efforts earned him a place in the Nazi list of people sentenced to death during World War II. His growing concern about the U.S. Securities and health of the U.S. economy is reflected in the article "Does the stock market drop slowdown?". In it he explains why the market - the barometer of business conditions.



Despite the fact that the stock market remains concentrated reflection of the critical judgments of people doing things, after the war, he lost much of its importance as an economic barometer.

Naturally, the usual producer, separated geographically and mentally away from everything but published in hard copy data of market fluctuations, still feeling anxious about the sudden fall or rise of certain warms. But in any case to have a correct view, he should be able to look beyond the cold numbers rise or fall of stocks and look at the underlying cause of this. Take, for example, the market, which we had just that. His ascent is the time of election Calvin Coolidge and hopes that people entertained by the fact that Coolidge administration was going to do for the business. Purchasing has become rampant - not in respect of certain shares, and in respect of all shares. Speculation over a calm prevailed proposition. Business took advice from their expectations.

It was supposed to come to an end - the opposite direction. He arrived in March. People who took advice from their hopes, began to consult with their fears.

Stocks, which had no foundation for growth, rapidly fell in price. And what about the other shares? They also dropped, because in some cases, people had to sacrifice the good to defend a purely speculative, in other cases because of certain reflex actions to which the market generally receptive.

Then what impact it has had a movement of shares on the economy and why? Without looking further into the cause of this movement, let's make a simple parallel.

After careful examination of the trend you decide to purchase a specific issue of shares. You call your broker, taking advice from their hopes, and place an order for 1,000 shares. You pay $ 100 per share. They grow to justify your hopes up to $ 200 you pay attention to your finances. Do you have a 200,000 dollars, whereas six months ago, you had only half that amount. You say that you stand in 200,000 dollars, because they bought those same shares.

But suddenly there is a bearish movement. (Do not blame the bears - its impact cleaning the works! They act like a pendulum to the random speculation.) Your shares have fallen by 50 points. If you believe in action, you continue to hold them, and if not, you're selling.

But apart from that, you take advice from your fears! You have lost 50,000 dollars! You are now at 50,000 dollars poorer than yesterday. Are you still at 50,000 dollars richer than they were six months ago. But to think so - it's not human.

You have lost 50,000 dollars? Hold on tight for all! And you keep, and others - hundreds of thousands of others - do the same. Purchases are cut - perhaps very little, money becomes a little less accessible - and the economy in the minds of millions and millions in the mouth is bad!

But is this true? Is the stock market barometer of her? Undermined if the elimination of stocks that have no foundation for the growth, the whole economic structure?

To some extent, yes - but why? Because people now consult with their fears more than hopes! Their heads are so busy today an activity that they can not take the advice of the past still with its causes or its future possibilities.

That is, most people can not. Few examine the horizon in all directions. Few get to the bottom of things. Few prepoyashut loins and make the proposed strike by their courage. Few went on they see that offers autumn or early winter or spring. They thus have planned their financial models that they can be ready for the next cumulative period - and they continue.

I do not blame her less-informed people on the other hand, they grew quiet when they began to burst bubbles. But those who know the broad international currents that affect the ebb and flow of stock, who realizes the importance of peace, good harvests, the demand for labor, stability of the currency in world markets, there is no need to follow too closely the surface trends. However, they must take into consideration that does not lie on the surface, since the existing situation, of course, has its own "if". But now the situation more stable than in March. The first reduction of speculative stocks is over. Stable stocks in a somewhat cheered. It's just a natural movement of the pendulum that has swung too far, because people were too full of hope.

The operator of the stock market - speculators - the seller of reality. When he reads his morning newspaper, he is urged by world events during a sudden outbreak or a movement long hesitation. It makes news in the movement, up or down.

Businessmen could learn from the speculator. Those who, like him, seeking in every word and sentence meaning, or their possible consequences, leaders in their fields.

Once I took my son to Niagara Falls. We looked at the big waterfall, and I pointed to the water flowing back to the waterfall.

"You see, my son - I said - the water flows up: it seems that this water is denying the law of nature. Why is that?"

And then we looked at as a great force of the water, facing the waterfall, makes the water move up and down and up again, but in the end down as a law of nature commands.

There are many strong forces working day and night to undermine our best practices, experience our most cautious intent. These are the "if", the payment of debts, crop yields, foreign currency, issue of British workers, and more! Everything has its place and its ability.

Things can evolve smoothly ascending, but the sudden upheaval in Russia, France, Poland, frost or drought during the break and stop the progress of thought in this period,

Then it's time to look back, look around and ahead. Then it's time to take careful advice in the critical judgments of the people doing the state. The answer can be found in the stock market, which reflects their opinion, but again may not reflect that. It all depends because it sooner or that the speculators with a sharp look, do not sell dreams, seeing into the future.

Whatever it was, the stock market - the barometer of the economy, but it should be perceived more as a cause, not effect. Those who use it as a pointer to the economic movements, we should look beyond mere numbers, or the ups and downs on large national or international forces, which are mainly responsible for them.